Pierre v. Connecticut General Life Ins. Company/Life Ins. Co. of North America

• Decision Date: 18 June 1991
• Docket Number: No. 89-3861,89-3861
• Citation: 932 F.2d 1552
• Parties: , 13 Employee Benefits Ca 2566 Celestine PIERRE and the Estate of James Nolan Pierre, Jr., Plaintiffs-Appellees, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY/LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1552

932 F.2d 1552

60 USLW 2025, 13 Employee Benefits Ca 2566

Celestine PIERRE and the Estate of James Nolan Pierre, Jr., Plaintiffs-Appellees, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY/LIFE INSURANCE

COMPANY OF NORTH AMERICA, Defendant-Appellant.

No. 89-3861.

United States Court of Appeals, Fifth Circuit.

June 18, 1991.

Virginia N. Roddy, Phelps, Dunbar, Marks, Cleverie & Sims Eugene R. Preaus, New Orleans, La., for defendant-appellant.

Paul Brian Spurlock, New Orleans, La., for plaintiffs-appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before REYNALDO G. GARZA, JOLLY and JONES, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

This case is before us for a second time. It requires us to determine the appropriate standard for review of factual determinations made by plan administrators under ERISA. The plaintiff brought suit for the denial of accidental death benefits under her husband's ERISA plan. In the first round, the district court applied the then proper standard of arbitrary and capricious review to the decisions of the ERISA plan administrator. Accordingly, it allowed the administrator to consider "hearsay" evidence, and concluded that the administrator's denial of the plaintiffs' claim was not arbitrary or capricious. On appeal, this court affirmed. 866 F.2d 141 (1989). Shortly thereafter, the Supreme Court decided Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), mandating de novo review for certain decisions by ERISA plan administrators. We vacated our previous opinion and remanded the case for further proceedings in the light of Bruch. 877 F.2d 345. On rehearing, the district court applied de novo review and excluded the hearsay evidence. It then proceeded to reject the plan administrator's decision, and entered judgment for the plaintiff. The defendant appeals. As we explain in further detail below, we hold that Bruch does not require de novo review for factual determinations such as those in this case. Rather, we conclude that an abuse of discretion standard of review is appropriate in this case. Applying that standard, we reverse the decision of the district court.

I

The relevant facts are straightforward. The defendant, Connecticut General Life Insurance Company/Life Insurance Company of North America (hereinafter "Connecticut General") issued to Martin Marietta Corporation two insurance policies to fund claims under its employee welfare benefit plan. The plaintiff-appellee's husband, James Pierre, was employed by Martin Marietta and participated in its employee insurance benefit plan. He was shot to death during the early morning of October 26, 1986.

The admitted killer was Antoinette Collins, the deceased's lover. After investigation by the New Orleans police department, it was determined that Pierre was last with Ms. Collins the morning he was killed and that she was the principal suspect. She soon turned herself in and made a statement claiming that she had in fact shot Pierre to death, that there were no witnesses, and that her actions had been in self-defense. The New Orleans police credited her story and declined to prosecute. On November 10, 1986, Pierre's wife filed a claim for $290,000 in benefits under one of the group accident insurance policies and a claim for $17,000 under the accidental injury benefit provision of the other policy. Along with these accidental death claims, she submitted a copy of the death certificate in which the death was classified as a "homicide."

Connecticut General investigated the claims. Detective Fanguy of the New Orleans police department related to Connecticut General that Ms. Collins had confessed to the police that she had shot the deceased following an altercation in his car during which he had pistol whipped her with one of his guns; that the interior of the deceased's car showed signs of a struggle; and that Ms. Collins appeared to have been beaten when she turned herself in to the police. Connecticut General also hired a private investigator to investigate the claims, and he uncovered additional facts. The private investigator viewed the police records and photographs of Ms. Collins at the police department, and confirmed that the police department photographs revealed visible bruises and lacerations on Ms. Collins and that one eye appeared badly injured.

The investigator also conducted a personal interview with Ms. Collins who acknowledged that she had been dating the deceased and stated that he had beaten her previously. She also stated that the deceased knew that she carried a gun. She further stated that they had argued at a bar on the night of his death and that he had beaten her with one of his two guns during a second dispute on the way home, stopping his car as they argued. It was during the second altercation that Ms. Collins claimed she took a pistol from her purse and shot the deceased twice while he was struggling with her.

On the basis of the information supplied by Detective Fanguy, the death certificate, and the private investigator's report, Mr. Weidele, the ERISA plan administrator, concluded that the deceased's death was not "accidental" within the terms of the policies; that is, because the deceased was the aggressor and his actions precipitated the shooting that resulted in his death, his death did not result "directly and from no other causes, from bodily injuries caused by accident." After reaching this conclusion, Connecticut General asked the plaintiff to submit any new or contrary information she might have for their reconsideration, and, receiving none, Connecticut General denied the claim.

II

The plaintiffs filed this action in state court to recover accidental death benefits under the two group insurance contracts. Connecticut General removed the action to United States District Court on the basis of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1132(e). The matter was submitted to the judge on stipulated facts at the initial hearing of this case. The parties agreed that under Louisiana law, benefits were not payable if Ms. Collins acted in self-defense. The plaintiffs, however, contested the accuracy and admissibility of Ms. Collins's hearsay statements. The district court applied the arbitrary and capricious standard of review to the plan administrator's denial of benefits, determined that the hearsay evidence relied upon by the plan administrator was properly considered in assessing the claim for benefits, and concluded that the decision of the administrator was "neither arbitrary or capricious." Specifically, the court found that the "non-hearsay evidence, by itself, would not have been sufficient to support the [plan administrator's] decision to deny plaintiffs' claim," but held that the rules of evidence are not binding in ERISA claims and allowed the statement. The district court entered judgment for the defendant, and we affirmed, holding that the denial of benefits was based on substantial evidence, and therefore, was not arbitrary and capricious. On petition for rehearing, we vacated our opinion and remanded the case to the district court for determination whether the Supreme Court's recent decision in Firestone Tire & Rubber Co. v. Bruch applied.

On remand, the district judge used a two-step analysis in concluding that the administrator's denial of the plaintiffs' claims was unwarranted. First, the district court held that because neither party had identified any provision in the ERISA plan expressly giving the plan administrator discretionary authority, de novo review was appropriate. Second, in applying de novo review, the court disallowed the hearsay evidence as lacking in trustworthiness, and concluded that it was insufficient to support the plan administrator's decision to deny the plaintiffs' claim. As a result, the district court reversed its earlier ruling and entered judgment for the plaintiffs. The defendant appeals.

III

A

The insurance policies in this action are governed by ERISA, 29 U.S.C. Sec. 1001 et seq. Connecticut General, the plan administrator ¹ of Martin Marietta's employee welfare plan, is a fiduciary for purposes of ERISA because it exercises authority or control in the distribution of assets of the benefits plan. 29 U.S.C. Sec. 1002(21)(A). ERISA provides that "a fiduciary shall discharge his duties with respect to a plan solely in the interests of the participants and beneficiaries and ... in accordance with the documents and instruments governing the plan." 29 U.S.C. Sec. 1104(a)(1)(D).

ERISA does not set out the appropriate standard of review for evaluating benefit determinations of plan administrators, fiduciaries or trustees in actions challenging those determinations under Sec. 1132(a)(1)(B). ² Federal courts, however, increasingly adopted the arbitrary and capricious standard developed under Sec. 186(c) of the Labor Management Relations Act ("LMRA"), 61 Stat. 157, 29 U.S.C. Sec. 186(c). The result, with few exceptions, was that the arbitrary and capricious standard became the standard of review in every federal jurisdiction that considered the denial of ERISA plan benefits, irrespective of the nature of the benefits claimed. ³ The justification for adopting this standard was that it prevented abdication of judicial control over fiduciaries while avoiding excessive judicial intervention in the operation of benefit plans. See Bayles v. Central States, Southeast & Southwest Areas Pension Fund, 602 F.2d 97, 100 (5th Cir.1979) and Wolfe v. J.C. Penney Co., 710 F.2d 388 (7th Cir.1983). This justification notwithstanding, the across-the-board use of this standard was not without some criticism. See, e.g., Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1049-53 (7th Cir.1987).

B

(1)

In Firestone Tire & Rubber Co. v. Bruch, supra, the Supreme Court for the first time addressed the issue of the appropriate standard of review for...